M/S Vishal Concrete Works vs. State Of Karnataka - Karnataka High Court, 10 April 2019

Cause title — parties, addresses and appearances

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU ON THE 10TH DAY OF APRIL, 2019 BEFORE THE HON'BLE MR. JUSTICE RAVI MALIMATH AND THE HON'BLE MR. JUSTICE S. G. PANDIT WRIT APPEAL No.6102 OF 2017 (T-RES) BETWEEN: M/S.VISHAL CONCRETE WORKS NO.18, KIDB INDUSTRIAL AREA HOSKOTE TALUK CHINTAMANI ROAD BENGALURU RURAL-562114. (REPRESENTED BY ITS VICE PRESIDENT SRI NARAYANDAS JAJU, AGED MAJOR) ... APPELLANT (BY SRI. K M SHIVAYOGISWAMY, ADVOCATE) AND: 1. STATE OF KARNATAKA REPRESENTED BY ITS SECRETARY DEPARTMENT OF FINANCE VIDHANA SOUDHA BENGALURU-560 001. 2. THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (AUDIT)-5.4 2 DVO-5, ROOM NO.404, 4TH FLOOR B-BLOCK, VTK-2, KORAMANGALA BENGALURU -560 047. ... RESPONDENTS (BY SRI. VIKRAM A HUILGOL, HCGP) THIS APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED BY THE LEARNED SINGLE JUDGE IN WRIT PETITION NO.41633/2017 DATED 18/09/2017 AND TO ALLOW THE WRIT PETITION FILED BY THE APPELLANT. THIS APPEAL COMING ON FOR ADMISSION THIS DAY, S.G.PANDIT J., DELIVERED THE FOLLOWING:

JUDGMENT

Aggrieved by the impugned order dated 18.09.2017 passed by the learned Single Judge in W.P.No.41633 of 2017, by which the petition was dismissed in view of the availability of effective alternative remedy, the writ petitioner is in appeal.

The petitioner filed writ petition under Articles 226 and 227 of the Constitution of India praying to quash the impugned reassessment order dated 25.03.2017 and consequential demand notice dated 25.03.2017 passed by the 2nd respondent. The petitioner which is engaged in the

manufacture of RCC poles, Blocks, Drain Covers and other allied products registered as a dealer under the Karnataka Value Added Tax Act, 2003, (for short ‘the KVAT Act’) and under the Central Sales Tax Act, 1956. The petitioner purchases raw materials within the State and also from outside the State of Karnataka. The petitioner filed returns of turnover under Section 35 of the KVAT Act and paid taxes. The Commissioner for Commercial Taxes proposed auditing of taxes for the assessment year 2010-2011. Notice was issued under Section 52(1) of KVAT Act for production of books of accounts and related documents for verification. It is the case of the petitioner that ex-parte proposition notice was issued on 14.09.2016 and the said notice was received on 24.09.2016. By letter dated 25.10.2016, the petitioner sought for some time to produce the books of accounts. On 06.12.2016, the 2nd respondent issued notice to produce the books of accounts within three days. Thereafter, the petitioner produced the necessary books of accounts. It is stated that after

verification of books of accounts, the respondents- authority has not issued any proposition notice for re- assessment. The petitioner had also claimed refund of Rs.3,03,691/- and the same was rejected without any notice. It is stated that the respondents–authority unilaterally rejected the claim of refund of input tax credit of Rs.3,03,691/-, which is wholly illegal and violative of principles of natural justice. Challenging the same, the petitioner filed the instant writ petition. The learned Single Judge dismissed the writ petition holding that the petitioner has alternate efficacious remedy of raising such objection before the next higher authority. Aggrieved by the same the petitioner is in appeal.

Heard the learned counsel for the appellant and learned HCGP for the respondents-State. Perused the appeal papers.

Learned counsel for the appellant submits that the learned Single Judge committed an error in dismissing the

writ petition without noticing the fact that the same is violative of principles of natural justice and that no proposition notice was issued. It is further contended that after verification of books of accounts and other documents produced by the petitioner, notice ought to have been issued before re-assessing the tax liability. It is his contention that when there is violation of principles of natural justice, writ petition under Article 226 of the Constitution of India would be maintainable.

Per contra, learned HCGP for the respondents–State submits that the learned Single Judge has rightly dismissed the writ petition, since the petitioner has an alternative efficacious remedy of appeal against the re- assessment of tax. Further he contends that the ex-parte proposition notice dated 14.09.2016 was issued to the petitioner and thereafter the petitioner has produced the books of accounts before the assessing authority. Hence, prays for dismissal of the writ appeal.

On hearing learned counsels for the parties and on going through the writ appeal papers, we are of the view, that the order of the learned Single Judge would not suffer from any error or perversity. The learned Single Judge has rightly dismissed the writ petition observing that the petitioner has an efficacious alternative remedy of raising such objections before the next higher authority. For the assessment year 2010-11 the petitioner had filed returns of turnover under Section 35 of KVAT Act and had paid taxes. The petitioner was issued proposition notice under Section 52(1) of the KVAT Act for production of books of accounts for verification. Notice issued initially was returned un-served but notice dated 14.09.2016 was received by the petitioner on 24.09.2016. In pursuance to the said notice, the assessee sought some time to produce the books of accounts. Subsequently on issuance of endorsement dated 06.12.2016 and on giving opportunity of three days to produce the books of accounts, the petitioner has produced the books of accounts before the

2nd respondent. The 2nd respondent re-assessed and passed the orders. The contention that no proposition notice was issued, cannot be accepted in view of the fact that the petitioner has received the notice dated 14.09.2016 issued under Sections 39(1), 36 and 72(2) of KVAT Act, 2003. Further the representative of the petitioner appeared before the respondent–assessing authority and produced the books of accounts. Therefore, the petitioner cannot contend that there is violation of principles of natural justice. Section 52 of the KVAT Act, provides for an appeal before the First Appellate Authority and the petitioner can very well raise all such objections including the violation of principles of natural justice before the Appellate Authority. In view of availability of an alternative efficacious remedy of appeal to the petitioner, the learned Single Judge has rightly dismissed the writ petition with liberty to raise such objections before the next Higher Authority. When the petitioner participated in the proceedings before the assessing authority by

producing the books of accounts, it is not open for the petitioner to say that in view of violation of principles of natural justice, writ petition filed under Article 226 of the Constitution of India would be maintainable. No ground is made out to interfere with the order of the learned Single Judge. Accordingly, the writ appeal is dismissed.

Learned Government Advocate is permitted to file his memo of appearance within four weeks. JUDGE

JUDGE

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